The Federal Ministry of Petroleum Resources will soon present the long-awaited Oil and Gas Reform Bill to President Muhammadu Buhari to boost output and attract foreign investment, it was gathered yesterday.
The reforms, 20 years in the making, are urgent this year as low oil prices and a shift towards renewable energy have made competition tougher to attract investment from oil majors.
Fiscal uncertainty has delayed a decision on a multi-billion dollar expansion by Royal Dutch Shell and its partners, while Chevron, Total and ExxonMobil are selling various Nigerian assets.
A spokesman for the Petroleum Ministry, which led the bill’s drafting, did not reply to a request for comment and the president’s office declined to comment.
Royal Dutch Shell, the largest international operator in Nigeria, said a botched reform effort would be “putting at risk and making unviable most of the planned projects”.
“We hope that the final bill would be one that would unlock potential investments that Nigeria’s rich resource base truly deserves,” a spokesman for Shell Companies in Nigeria (SCiN) said.
A draft summary seen by Reuters included provisions that would streamline and reduce some oil and gas royalties.
One of the three sources close to the negotiations told Reuters that even the government’s reduced take of oil revenue, through taxes, royalties and other fees, as “aggressive” compared with other nations.
Some African countries are trying to cut red tape and taxes to make developing their oil and gas reserves attractive to firms.
It proposes to boost the amount of money companies pay to local communities and for environmental cleanups.
It would also alter the dispute resolution process between companies and the government, though specifics of the changes were not included in the summary.
The bill also included measures aimed at pushing companies to develop gas discoveries and a framework for gas tariffs and delivery.
Commercialising gas, particularly for use in local power generation, is a core government priority.
The bill will be presented in one piece with four chapters, the sources said. An effort to pass reforms by breaking them into several bills in 2018 fell flat; just one portion made it to President Buhari’s desk, and he never signed it.
Once Buhari signs off on the draft, it will go to the National Assembly, which is controlled by his All Progressives Congress (APC) party. The alignment of the Presidency and the assembly give the measure the best chance of passage it has had in years.
The law underpinning oil, the financial lifeline for Africa’s biggest exporter, has not been updated since the 1960s.
Pumping its oil has historically been hugely profitable, but changes late last year that hiked Nigeria’s take of oil earnings, and a VAT increase, frustrated companies.